Homework Answers
Ex post real interest rate = Nominal interest - Actual inflation rate = 9.5% - 8.2% = 1.3%
Ex ante real interest rate = Nominal interest - Expected inflation rate = 9.5% - 11% = -1.5%
The real realized rate of return = 1.3%
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4. Ex post versus ex ante inflation rates Complete the following table by calculating the ex...
Suppose the nominal interest rate equals 9%, the expected inflation rate is 5%, and actual inflation...
Suppose the nominal interest rate equals 9%, the expected inflation rate is 5%, and actual inflation turns out to be 3%. In this case, the: a. ex ante real interest rate is 4%. b. ex post real interest rate is 4%. C. ex ante real interest rate is 6%. d. ex post real interest rate is 2%
please print out words show the answer，thanks！ 8. Suppose real interest rate r-4% and expected inflation...
please print out words show the
answer，thanks！
8. Suppose real interest rate r-4% and expected inflation rate for the following year En 4%. (a) What is the nominal interest rate? (2 points) (b) What is the ex ante real interest rate? (2 points) Suppose the actual inflation rate at the end of the following year π turned out to be 6%. (c) What is the ex post real interest rate? (3 points) (d) Borrowers (gain/oseand lende and lenders (gain/lose) (4...
a. What is the relationship between real interest rate, nominal interest rate and inflation rate? b....
a. What is the relationship between real interest rate, nominal interest rate and inflation rate? b. What are the reasons for very high nominal interest rates in the 1980s? c. Explain ex-ante real rate and ex-post real rate.
Macroeconomic Canadian education Chapter 4 Money and Inflation 65 The Real Cost of Borrowing and the...
Macroeconomic Canadian education
Chapter 4 Money and Inflation 65 The Real Cost of Borrowing and the Real Interest Rate In this exercise, we see why the real cost of borrowing is equal to the real interest rate. 5. Since a borrower's actual dollar payments are based on the nominal interest a. rate, it is sometimes difmicult to see why the real cost of borrowing is equal to the real interest rate. Consider a family that buys a new house for...
4. Inflation and interest rates The following table shows the average nominal interest rates on six-month...
4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 1997 and 2001, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 1997 to 2001. (All rates are rounded to the nearest tenth of a percent.) Year Nominal Interest Rate Inflation Rate (Percent) (Percent) 1997 5.2 2.3 1998 4.8 1.5 1999 4.8...
Given the following 4 scenarios: The contract interest rate was 3.5% and the expected inflation rate...
Given the following 4 scenarios: The contract interest rate was 3.5% and the expected inflation rate was 1.5%. The contract interest rate was 5% and the expected inflation rate was 2%. The contract interest rate was 7.5% and the expected inflation rate was 4%. The contract interest rate was 9% and the expected inflation rate was 5%. and an ex post actual inflation rate of 4.75%, answer both of the following questions. a) Indicate which scenario was expected to be...
Suppose the nominal interest rate on savings accounts is 11% per year, and both actual and expected inflation are equal to 5%.
6. The Fisher effect and the cost of unexpected inflation Suppose the nominal interest rate on savings accounts is 11% per year, and both actual and expected inflation are equal to 5%. Complete the first row of the table by filling in the expected real interest rate and the actual real interest rate before any change in the money supply. Now suppose the Fed unexpectedly increases the growth rate of the money supply, causing the inflation rate to rise unexpectedly from 5% to...
Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 2004 and 2008
4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 2004 and 2008, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 2004 to 2008. (All rates are rounded to the nearest tenth of a percent.)On the following graph, use the orange points (square symbol) to plot the nominal interest rates for...
2. A bond's nominal interest rate is 8.80%. If the expected inflation rate is 2.10% and...
2. A bond's nominal interest rate is 8.80%. If the expected inflation rate is 2.10% and the realized (actual) inflation rate is 2.55%. What is the bond's real rate of return? A. 8.35% B. 3.70% C. 6.25% D. 5.80%
Problem 2-4 (similar to) (Inflation and interest rates) What would you expect the nominal rate of...
Problem 2-4 (similar to) (Inflation and interest rates) What would you expect the nominal rate of interest to be if the real rate is 3.7 percent and the expected inflation rate is 7.1 percent? The nominal rate of interest is %. (Round to two decimal places.)
Suppose the nominal interest rate equals 9%, the expected inflation rate is 5%, and actual inflation turns out to be 3%. In this case, the: a. ex ante real interest rate is 4%. b. ex post real interest rate is 4%. C. ex ante real interest rate is 6%. d. ex post real interest rate is 2%
please print out words show the
answer，thanks！
8. Suppose real interest rate r-4% and expected inflation rate for the following year En 4%. (a) What is the nominal interest rate? (2 points) (b) What is the ex ante real interest rate? (2 points) Suppose the actual inflation rate at the end of the following year π turned out to be 6%. (c) What is the ex post real interest rate? (3 points) (d) Borrowers (gain/oseand lende and lenders (gain/lose) (4...
a. What is the relationship between real interest rate, nominal interest rate and inflation rate? b. What are the reasons for very high nominal interest rates in the 1980s? c. Explain ex-ante real rate and ex-post real rate.
Macroeconomic Canadian education
Chapter 4 Money and Inflation 65 The Real Cost of Borrowing and the Real Interest Rate In this exercise, we see why the real cost of borrowing is equal to the real interest rate. 5. Since a borrower's actual dollar payments are based on the nominal interest a. rate, it is sometimes difmicult to see why the real cost of borrowing is equal to the real interest rate. Consider a family that buys a new house for...
4. Inflation and interest rates The following table shows the average nominal interest rates on six-month Treasury bills between 2004 and 2008, which determined the nominal interest rate that the U.S. government paid when it issued debt in those years. The table also shows the inflation rate for the years 2004 to 2008. (All rates are rounded to the nearest tenth of a percent.)On the following graph, use the orange points (square symbol) to plot the nominal interest rates for...
Problem 2-4 (similar to) (Inflation and interest rates) What would you expect the nominal rate of interest to be if the real rate is 3.7 percent and the expected inflation rate is 7.1 percent? The nominal rate of interest is %. (Round to two decimal places.)
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